(a) The commissioner is empowered and directed to refund the amount of any eligible bad debt credit incurred by a manufacturing distributor or wholesale dealer and jobber of tobacco products. No amount shall be refunded unless the debt has been found to be worthless and actually charged off for federal income tax purposes. If the taxpayer receives a refund pursuant to this section arising from any bad debt so charged off that is thereafter in whole or in part paid to the manufacturing distributor or wholesale dealer and jobber, the amount so paid shall be included in the first return filed after the collection and the tax paid accordingly.

(b) For purposes of this section, “eligible bad debt credit” means the taxes attributable to any portion of a debt arising from a sale of tobacco products subject to tax under this part that is not otherwise deductible or excludable, that has become worthless or uncollectible, and that has been actually charged off for federal income tax purposes. A bad debt shall not include any interest on the wholesale price of a tobacco product, uncollectible amounts of property that remain in the possession of the manufacturing distributor or the wholesale dealer and jobber until the full purchase price is paid, expenses incurred in attempting to collect any account receivable or any portion of the debt recovered, accounts receivable that have been sold to a third party, or repossessed property.

(c) Any claim for an eligible bad debt credit under this section shall be submitted as a claim for refund supported by the following:

(1) A copy of the original invoice;

(2) Evidence that the tobacco products described in the invoice were delivered to the person who ordered them;

(3) Evidence that the person who ordered and received the tobacco products did not pay the manufacturing distributor or the wholesale dealer and jobber for the tobacco products and that the manufacturing distributor or the wholesale dealer and jobber used reasonable collection practices in attempting to collect the debt; and

(4) Evidence that the debt was written off for federal tax purposes.